Mount Prospect man sentenced to 23 years in Ponzi scheme

September 15, 2010|By Andy Grimm, Tribune Reporter

Mount Prospect accountant Frank Castaldi wept in court Wednesday as a parade of friends and relatives described how he had joined them for weddings and other high points of their lives, while at the same time defrauding them of their life's savings.

Castaldi was sentenced to 23 years in federal prison after pleading guilty to fraud charges in connection with a Ponzi scheme he operated for more than 20 years.

"He was not your typical scam artist," said Judy Milazzo, the wife of a construction worker who invested with Castaldi. "He was not a Madoff. He was family."

Castaldi's victims, unlike those duped by New York investment guru Bernard Madoff, were mostly blue-collar. Castaldi collected $77 million from a pool of investors that included the parents of his godchildren, longtime employees, relatives and friends, including first-generation Italian immigrants who had known him since he was an infant.

The 23-year sentence ordered by Judge John Darrah was nearly double the 12 years recommended by prosecutors. Castaldi also was ordered to pay $31 million in restitution to his victims and $8.8 million to the IRS.

Randall Samborn, a spokesman for the U.S. attorney's office, said prosecutors do not believe Castaldi has any significant cash or assets. Defense attorney Michael Monico said Castaldi did not live a lavish lifestyle, using some of the invested money to subsidize unprofitable businesses, including a banquet hall, restaurant, travel agency, real estate firm and insurance company.

Castaldi always greeted investors with a hug and a kiss, they testified Wednesday.

Frank Cesare, 73, said he is homeless, suffers from prostate cancer and has no money since losing his savings to Castaldi's scheme.

"I have known his family for 55 years, and Frank since he was in diapers," Cesare said. "Frank was like a son to me."

Daisy Herbe said she worked at a banquet hall Castaldi owned. When her husband died in May 2008, she said, Castaldi persuaded her to invest the payout from his life insurance in what he told her was a "certificate of deposit" that would pay 10 percent interest, tax-free, guaranteed.

A few months later, Castaldi went to authorities and revealed the scheme.

"I died the day my husband died … but he killed all of us the day he turned himself in," said Herbe, who said she is likely to lose her home to foreclosure.

She lost $300,000 and now survives on her income and Social Security. "I'm 67. How many days do I have left to work?"

Though Castaldi had a clean record and was seen for most his career as a pillar of the community, Darrah said Castaldi was defrauding his victims for decades.

"Although his first conviction came when he pled guilty," Darrah said, "he has lived a life of crime."

Castaldi's stiff sentence gave little consolation to his victims, said Milazzo, who organized meetings of victims and writes a blog about Castaldi.

"He should get life," she said. "We'll never be free of this, and he will be free someday."